Chamber of Pawnbrokers of the Philippines, Inc.

April 4, 2007 BIR RULING [DA-210-07] DA-517-2003; Secs. 237 & 238, NIRC; RR 12-98 Chamber of Pawnbrokers of the Philippines, Inc. c/o Villarica Pawnshop Cubao, Quezon City Attention: Atty. Henry R. Villarica Gentlemen : This refers to your undated letter, requesting for a ruling on behalf of your members, with respect to whether or not your printer/s are required to secure an Authority to Print (ATP) from the Bureau of Internal Revenue (BIR) as a condition for the printing of your pawn tickets. It is represented that the Chamber of Pawnbrokers of the Philippines, Inc. (CPPI) takes this initiative to secure a ruling in behalf of its members due to the numerous complaints reaching it about the conflicting positions taken by the different Revenue Districts Offices (RDOs) of the BIR in the implementation of its tax mapping operations. Apparently some RDOs take the position that the pawn tickets which are serially numbered and maintained in booklet forms should require an ATP and should be registered with the BIR. CPPI's members have two sets of documents issued to their clients. One is the Pawn Ticket (PT) issued to evidence the receipt of a jewelry delivered as a security for the amount borrowed. This PT is to be surrendered by the pawner when he pays his obligation and secures the return of the pawned item. The other document is the Official Receipts (OR) issued to acknowledge the receipt of the principal borrowed and the interest constituting the income of the pawnshop from its lending activities. CPPI now requests this Office to confirm its opinion that the PT is not considered as an invoice or official receipt within the contemplation of Section 237 of the Tax Code of 1997, as amended by Republic Act (RA) No. 9337, hence, its printing will not be governed by the provisions of Section 238 of the same Tax Code. In reply, please be informed that Section 238 of the same Tax Code provides that: "Sec. 238. Printing of Receipts or Sales or Commercial Invoices . All persons who are engaged in business shall secure from the Bureau of Internal Revenue an authority to print receipts or sales or commercial invoices before a printer can print the same." It is clear from the aforesaid provision that the ATP is required in the printing of receipts or sales or commercial invoices. Sales or commercial invoices are issued to the buyer of goods while receipts are issued to buyer of services. In fine, these are the documents issued to evidence a transaction which normally results in realization of income. EIDATc The above discussion finds support in BIR Ruling No. DA-517-2003 which defined "receipt(s)" as follows: "As defined in Revenue Regulations 12-98, the term "receipt(s)" means a written admission or acknowledgement of the fact of payment in money or other settlement between seller and buyer of goods, debtor or creditor, or persons rendering services and client or customers. Apparently, it is not merely an evidence of sale but necessarily an evidence of payment. This is obvious from the provisions of Section 237 to the effect that the issuance of an invoice is required the moment there is already a sale or transaction of merchandise or services rendered (BIR Ruling No. 046-89, dated May 27, 1989)." Moreover, A17 of Revenue Memorandum Circular (RMC) No. 62-2005 provides that the following information must be contained in a VAT invoice or VAT official receipt 1. Name of Seller 2. Business Style of the Seller 3. Business Address of the Seller 4. A statement that the seller is a VAT-registered person, followed by his TIN 5. Name of the Buyer 6. Business Style of the Buyer 7. Address of the Buyer 8. TIN of the Buyer, if VAT-registered and amount exceed P1,000.00 9. Date of transaction 10. Quantity 11. Unit cost 12. Description of the goods or properties or nature of the service 13. Purchase price plus the VAT, provided that: xxx xxx xxx From the foregoing, it is clear that a commercial invoice or receipt must show that a sale transaction has been entered into by the parties. In addition, a commercial invoice or receipt under RR 12-98 must show not only evidence of such sale but also of payment by the buyer. A PT, however, is merely evidence of the fact that an individual has given personal property to the pawnshop as security for the loan provided by the latter. Thus, it is evident that a PT cannot be considered as either a commercial invoice or receipt within the contemplation of Section 237 of the Tax Code of 1997, as amended. Accordingly, this Office confirms your opinion that since a PT is neither a commercial invoice nor a receipt, it cannot be subject to the APT requirement under Section 238 of the same Tax Code. EcHIDT This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service